
On December 9, 2024, Intercontinental Exchange (ICE), which operates futures exchanges and the New York Stock Exchange among others, launched Japan power futures, becoming the fourth exchange to offer them alongside the Tokyo Commodity Exchange (TOCOM), European Energy Exchange (EEX), and Chicago Mercantile Exchange (CME).
ICE offers baseload and peakload futures for the Tokyo and Kansai TSO areas, with peakload covering “the half-hourly prices from 08:00 JST to 20:00 JST of the day-ahead auction of the Japan Electric Power Exchange (JEPX).”
According to ICE’s statement, the future are “offered in monthly, quarterly and seasonal contracts as well as a Calendar and Fiscal Year contract. In addition, customers can trade spreads between Tokyo and Kansai to manage positions and price differences across these regions, as well as manage exposure to regional price risks.”
“Secondary fuels including electricity are produced through the conversion of primary energy sources like natural gas, coal and oil, and the price of electricity is derived from the interaction of these competing input fuels, all of which trade on ICE. Natural gas and coal make up the majority of Japan’s electricity generation and through trading of these contracts on ICE, customers benefit from improved price dissemination,” said ICE’s Managing Director of Utility Markets Gordon Bennett.
Power futures trading volume in Japan has been growing amid increasing awareness of the importance of hedging among retailers and other market players. Trading volume on EEX, which started offering Japan power futures in May 2020 and has an approximately 90% market share, increased 3.4x to 28.9TWh in the first half of 2024 compared to the same period last year.
TOCOM introduced Japan power futures on a trial basis in 2019 before adding them to its permanent offering in 2022. CME launched Japan power futures in 2021 and options in 2022. It has been reported that EEX is planning to add Japan power options in the first quarter of next year.